It's Never Too Soon To Go International - Cumulus Energy's US/UK Strategy
Why would a pre-revenue British technology company go to the trouble and expense of setting up second base in the US? I’m in Oakland, California – just a short hop across the bay from San Francisco – to find out why one UK business did just that.
Oakland, a rapidly gentrifying satellite of San Francisco, is the US home of Cumulus Energy Storage, a company founded by British entrepreneurs Nick Kitchin and Darron Brackenbury and headquartered in the South Yorkshire town of Rotherham. As Chief Operating Officer, Brackenbury – along with CTO Michael Hurwitz – oversees company’s research and development operation in California, while Managing Director Kitchin remains based in the UK. And if all goes according to plan, the company’s copper/zinc battery technology will play an important role in the development of the renewable energy industry on both sides of the Atlantic.
From a UK perspective the most visible manifestations of the government’s commitment to renewable power generation are the ever-increasing estate of offshore and onshore wind farms and the increasingly familiar sight of rooftop solar panels. From a standing start in 2001, the capacity of UK wind power sector had risen to 15.5 terrawatt hours ( equivalent to the needs of 4.7 million homes) by the beginning of the current decade and permission has been given for new farms to come on stream. Meanwhile installations of solar panels on households passed the half million mark at the beginning of 2014.
But if that’s good news in terms of clean energy, it raises major problems for grid operators. Wind and solar are “intermittent” sources and their output is unpredictable. Put simply, the contribution of wind and solar facilities rises and falls depending on the weather, creating the possibility of both under supply and over capacity. Thus, the race is on to find smart grid solutions that will allow grid operators to manage the ups and downs of wind and solar input. Battery technology is one solution, allowing grids to store energy when it is being generated and release it when it is needed.
Of course, intermittency isn’t simply a problem for the UK and over in California, where 20% of energy is generated by renewables, the state has set storage targets for energy operators. The race is now on to find workable battery technologies in a market that Cumulus says will be worth £6bn by 2020.
By focusing on copper zinc batteries ( boring but reliable chemistry, according to MD Nick Kitchin) cumulus is developing units ranging from 1 to 100 megawatt hour capacity, which it says will be more cost-effective than rival technologies. The uses range from demand management to solving the intermittency problem.
On Both Sides Of the Pond.
So why go multi-national – or at least transnational – at such an early stage in the company’s development? The conventional answer often relates to funding. Cleantech ventures can be capital intensive and to attract US investment, UK technology companies often find it necessary to establish a beachhead on the other side of the Atlantic. But in the case of Cumulus the key driver was access to talent and the ability to hire staff rapidly.
“In the US, it typically takes about two weeks to recruit someone – you can’t do it that quickly in the UK,” says Kitchin. That agility on the recruitment front is down to US “at will” employment laws, which not only allow companies to fire staff members with no notice but also enable the employees themselves to simply quit their jobs and leave on the same day. To British ears this is controversial and reeks of insecurity but it does speed up the recruitment cycle. “It can take four months to recruit in Britain adds Kitchin. “And if you’re funded on a 12 month grant cycle, that doesn’t work.”
The dual location also provides the company with first-hand overview of two key markets. A presence in California, in particular, ensures that the company is up to speed with all the regulatory developments that are pushing grid operators and power users into adopting storage technologies in one of the most environmentally progressive states in the US. Meanwhile from a base in Rotherham, Kitchin has full sight of the carbon targets, renewables market development and smart grid opportunities across Britain and the EU. “And we have access to grants from both the EU and the US,” says Brackenbury.
A presence on the ground also facilities conversations with customers, regulators and legislators. “This grid storage market is emerging but it is emerging in an established market,” says Kitchin. “By being here we can participate in the discussions.”
There are perhaps personal factors too. Brackenbury although British has been based in California for some time, so the state made a natural base. And in his view, the dual location strategy is becoming more common for ambitious British technology companies. “It has become more fashionable,” he says. A by-product of the time difference is a 24 hour operation.
The next step for cumulus is to develop a 1mwh per month battery manufacturing capacity and from there to move into commercial production from a UK manufacturing facility in Sheffield. R&D will continue in the US and manufacturing may follow.
Cumulus was one of the companies included in the UK government’s Clean and Cool cleantech trade mission to California in January. Perhaps that provides a perfect illustration of the advantages of duel location. Support from the UK’s Innovate agency and the Long Run Venture trade mission organiser rewarded Cumulus’ status as an innovative British company. That support has in turn raised the profile of a business that already has an up-and-running transatlantic presence.